Connected cars, privacy, and making the most of our data | NTT DATA

Mon, 04 October 2021

Connected cars, privacy, and making the most of our data

We live in an increasingly connected world, with our everyday devices able to communicate with each other like never before. This Internet of Things (IoT) fundamentally changes how we live and work and creates opportunities for businesses across all industries to improve customer experience and generate business value. The automotive industry is no exception, with Original Equipment Manufacturers (OEMs) exploring new and innovative ways to take advantage of the connected car.

Such innovation is not without controversy. Ford’s recent patent for a system that captures nearby billboard advertising and places it onto a connected car’s infotainment system prompted concerns about safety and how the OEM would subsequently use drivers’ data. Similar conversations are ongoing across other industries; for example, some customers have dubbed data harvesting via Smart TVs a ‘privacy violation’ after receiving constant targeted advertising whilst browsing for something to watch.

Discussions over excessively intrusive advertisements represent just one of many questions facing the automotive industry and its usage of connected car data. With increasing consumer concern around both privacy and protection of their data, OEMs need a clear strategy that addresses how to balance these concerns with the benefits that connected car data can provide for both the OEM and the customer.

Data and privacy across industries

It is crucial to appreciate that there is no single correct answer; for instance, the differing approaches between Apple iOS and Google Android are instructive. To maintain iOS’s position as the premium operating system and their phenomenal margin, Apple increasingly utilises privacy as a critical differentiator. This was reflected in Apple’s decision during the release of iOS 14.5 to focus on new features that limited the ability of operators within their eco-system to track end-users without consent with the release of iOS 14.5.

By comparison, Google’s core business model remains driven by advertising and relies on collecting and sharing personal data. Research has identified that the Android operating system extracts considerably more data than iOS, although Google disputes the magnitude. Nevertheless, customers are trading privacy for value in exchange for a comparable user experience and a substantially cheaper handset.

What does this mean for automotive OEMs? Adopting Apple’s approach makes sense for those seeking to differentiate in the luxury market. But for others, providing personalised ads and utilising other forms of data monetisation may enable OEMs to place a lower price point on their vehicles. Most informed customers are prepared to make trade-offs and have their data utilised if they also clearly receive value from the exchange. OEMs, particularly those operating in the mass market, need to avoid being undercut by competitors who strike this balance more effectively. As an example, there have been many concerns raised about how TikTok utilises user data. However, it continues to be massively successful because it provides a superb end-user experience, with its content algorithm a true differentiator.

Putting the customer experience first

Therefore, focusing on delivering value and superb customer experience through connected car data is critical for automotive OEMs. To do so, OEMs need to:

  1. Understand the full breadth of potential use cases enabled by connected car data. Although revenue generation use cases tend to draw the most attention, there are significant opportunities to deliver cost reductions and improve regulatory compliance. For example, there are meaningful opportunities to reduce warranty claims by utilising sensor data to recommend pre-emptive maintenance on parts that are likely to fail. This delivers both financial benefits to the OEM and, if it reduces their inconvenience, delights the customer
  2. Consider how their selected use case align with each other and their target end-to-end customer experience. With the transition to electric vehicles well underway, the objective driving experience is expected to become more homogenous. Therefore the services available within the vehicle will grow in importance as a differentiator. OEMs need to improve their customer segmentation and insights, as the value of specific services will vary depending on a number of factors (e.g. income, location) and incorporate these into their customer strategy from the beginning.
  3. Have an approach to combining connected car data with additional customer-focused data points to achieve their true value. To do so will require a willingness to engage in partnerships to improve data sharing and deliver value for customers, for example, with retailers to enhance aftersales experiences.

NTT DATA, with its rich telco heritage and partnerships throughout the automotive and connected car industry, is well placed to support. By bringing in lessons learned from delivering similar engagements in other sectors, we help clients manage the data privacy trade-off and provide an end-to-end customer experience that is both innovative and focused.

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